The war with Iran that we have been waiting for is officially here. The U.S. and Israel are absolutely pummeling Iranian military targets, and in return the Iranians are striking targets all over the Middle East. As you will see below, even a British military base in Cyprus has just been hit. I think that the Iranians were hoping that the unexpected nations that they are targeting would be so traumatized that they would beg the United States to stop the conflict, but instead it seems like almost everyone is uniting against Iran. There is a growing consensus that there is no way that the regime in Iran can remain in place after this, and that means that this war could go on for an extended period of time.
Needless to say, this is not going to be good news for the global economy at all.
Our entire way of life depends upon cheap energy, and nearly a third of all oil that travels by sea must go through the Strait of Hormuz…
Positioned between Oman and Iran, the strait serves as a critical transit route – and potential chokepoint – for global crude, with about 13 million barrels per day moving through it in 2025, equal to approximately 31% of all seaborne oil flows, Kpler data showed.
It links major Gulf producers including Saudi Arabia, Iran, Iraq and the United Arab Emirates to the Gulf of Oman and the Arabian Sea.
Everyone agrees that the closure of the Strait of Hormuz would be a really big deal.
Unfortunately, it appears that the Iranians have already decided to pull the trigger.
It is being reported that the IRGC is warning vessels that the the Strait of Hormuz is now closed…
A European Union naval mission official told Reuters that vessels in the region are receiving marine radio warnings from Iran’s Revolutionary Guard instructing ships not to pass through the Strait of Hormuz.
Apparently there were some tankers that chose not to heed the warnings from the IRGC, and so they got attacked.
The first tanker that got hit by the Iranians was named Skylight…
The first attack against a ship in the Strait of Hormuz occurred on Sunday morning.
Oman’s Maritime Security Centre announced that an oil tanker named Skylight, flying the flag of the Republic of Palau, was targeted around five nautical miles (9.26km) north of Khasab Port.
In a statement shared on X, Oman authorities confirmed that there were 20 crew members on board, including 15 holding Indian nationality and 5 of Iranian nationality, and they were all evacuated.
According to a British news source, other oil tankers were subsequently attacked…
THREE British and US oil tankers have been hit in the Gulf and the Strait of Hormuz, Iran has claimed, as Donald Trump claims to have sunk nine of its regime’s warships.
Iran has launched a new round of ship strikes in a brazen retaliation for the US’ devastating “Epic Fury” military operation.
I don’t think that we are going to see much oil get through the Strait of Hormuz for the foreseeable future.
As a result, the price of oil is likely to go much higher.
As I write this article, it has smashed through the $70 barrier, but this is probably just the beginning.
A former White House energy advisor named Bob McNally is warning that if the Strait of Hormuz is closed for an extended period of time it will mean “a guaranteed global recession”…
More than 14 million barrels per day flowed through the Strait in 2025, or a third of the world’s total seaborne crude exports, according to data from energy consulting firm Kpler. About three-quarters of those barrels went to China, India, Japan and South Korea. China, the world’s second-largest economy, receives half of its crude imports from the Strait.
“A prolonged closure of the Strait of Hormuz is a guaranteed global recession,” McNally said.
I believe that he is correct.
The Iranians have large numbers of anti-ship missile launchers dug deep into the cliffs that overlook the Strait.
I am not sure that there will be an easy way to take out those launchers.
So for now the Iranians have the upper hand in the Strait of Hormuz, and one analyst is telling us that “nothing seems to be going through at the moment”…
“Tankers are starting to build by the Strait of Hormuz, but nothing seems to be going through at the moment – tankers are definitely spooked,” said Matt Smith, oil analyst at energy consulting firm Kpler.
If the price of oil rises above 100 dollars a barrel, that will be a real problem.
Unfortunately, some analysts are convinced that is precisely what could happen. Here is one example…
Should Iran succeed in closing the Strait, the implications for the global oil markets could be severe.
“This could present a scenario three times the severity of the Arab oil embargo and Iranian revolution in the 1970s, and drive oil prices into the triple digits, while LNG prices retest the record highs of 2022,” Kavonic noted.
And here is another example…
If access through the strait is limited for an extended period, prices could go “materially above $100/barrel,” said analysts at TD Securities in a March 1 note.
On the other hand, if access through the strait is guaranteed and hostilities cease, the added costs to account for extra risk could evaporate in a matter of weeks, the TD team wrote.
If the war ends quickly, the disruption that we will experience will be fairly minimal.
But if this war persists for some time, everybody is going to feel the pain…
If oil rises and stays there, drivers will feel it quickly at the pump. The national average gasoline price is about $2.98 a gallon but oil at $100 for a few months would drive that up.
The impact would not stop at the gas station. Oil is needed for transportation, shipping, manufacturing, packaging and agriculture. Higher crude prices raise costs for trucking groceries, flying passengers, producing plastics and moving goods around the country.
Theoretically, one of the oil-exporting nations that would be hurt the most by the closure of the Strait of Hormuz would be Saudi Arabia.
But the Washington Post is reporting that Saudi Arabia has been secretly encouraging President Trump to attack Iran…
President Donald Trump launched Saturday’s wide-ranging attack on Iran after a weeks-long lobbying effort by an unusual pair of U.S. allies in the Middle East — Israel and Saudi Arabia — according to four people familiar with the matter, as Israeli and U.S. forces teamed to topple Iranian Supreme Leader Ali Khamenei after nearly four decades in power.
Saudi Crown Prince Mohammed bin Salman made multiple private phone calls to Trump over the past month advocating a U.S. attack, despite his public support for a diplomatic solution, the four people said. Israeli Prime Minister Benjamin Netanyahu, meanwhile, continued his long-running public campaign for U.S. strikes against what he views as an existential enemy of his country.
The combined effort helped lead Trump to order a massive aerial campaign against Iran’s leadership and military, which in its initial hour led to the death of Khamenei and several other senior Iranian officials.
Why would Saudi Arabia do this?
The Saudis know that the closure of the Strait of Hormuz is just temporary.
But their problems with Iran have been going on for a very long time.
Saudi Arabia is the global epicenter for Sunni Islam, and Iran is the global epicenter for Shia Islam.
The Saudis are convinced that Sunni Islam will someday dominate the entire world, and the Iranians are convinced that Shia Islam will someday dominate the entire world.
Most people living in the western world do not realize this.
The global struggle between Sunni Islam and Shia Islam stretches back for many centuries, and now Saudi Arabia senses an opportunity to strike a decisive blow to their mortal enemy.
This also helps to explain why the Iranians have been launching missiles at many of their Sunni neighbors.
The Iranians are not stupid. They can see what is going on and they are very upset about it.
So I can understand why the Iranians have been targeting Sunni countries, but I have no idea why they thought it would be a good idea to hit Cyprus…
The United Kingdom’s Akrotiri air force base in Cyprus has been hit by a drone, the Cyprus Mail learned in the early hours of Monday morning.
Personnel on the bases were informed that a “small drone” had “impacted the airfield” and that the bases’ authorities were responding.
Does Iran actually want to draw as many countries into this war as possible?
It kind of seems as if that is their goal.
Interestingly, multiple rockets were fired into Israel from southern Lebanon just a little while ago.
Many are suggesting that this means that Hezbollah has joined the war.
In response, the IDF is now conducting airstrikes in Lebanon.
We were warned that a conflict with Iran could become a major regional war, and it appears that this is now becoming a reality.
So buckle up and hold on tight, because I think that we are just in the early moments of a really wild ride.
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